Government Bailouts

Should the government bail out lending institutions or should they let them fall by the wayside? I have heard on more than one occasion that we the people, (read Government) should not bail out the lending institutions that have caused the problem with the real estate market in the first place. “Too bad on those institutions.” For the most part I agree, business is business, and sometimes businesses fail. However when it comes to Fannie Mae and Freddie Mac I draw the line. I applaud the government’s quick action to guarantee the solvency of these organizations. Imagine if you will what would happen if the main money lender for the Federal Government went out of business. I shudder to think. Sub prime lenders who made risky loans in order to achieve higher profits; No problem there, where they lay is where they stay. That is business. However Fannie Mae and Freddie Mac are not get rich quick loan companies. They are the FHA, IHFA, etc loan products that are the true back bone of the real estate and mortgage industry. Having them go out of business would be bad for everyone. Period! End of discussion!!

 

If you are concerned about if your money is safe at your bank first make certain that it is FDIC insured. Once you know your money is at an FDIC insured bank visit http://www4.fdic.gov/EDIE/ for an explanation of how your money is protected and a calculator to check it. In easy terms, remember I am a realtor not a banker, up to $100,000 dollars of your money is protected and insured at the FIDC bank. Call your banker and ask them to explain the rest.

 

 The new programs that the Government is coming out with to help people with the current crisis sound positive and look positive. The real question remains. Can the people who need the help qualify? The best part of the new package is a $7,500 tax credit aimed at first time home buyers. The more first time home buyers we have the better the market will be. These new rules will not go into effect until October.

Selling My Home

 

Everyone has heard that when buying a home the three most important things to remember are Location! Location! Location! So what should you consider about selling? What are the three most important things to consider? Price! Price! Price! It sounds simple enough however too many times we tend to get caught up in the emotion of selling our home. All the work, love and joy we have had there or put into the home we perceive as added value. We want to be compensated for it. The thing to remember is that not everyone puts the same dollar value on our personal sentiment as we tend to. I remember one time I was at our Church auction and one of our young adults who had participated in a play we had put on there was bidding on some handmade (by herself as well as others) banners that were used as props in the play. Before the bidding had started she offered 10 times what they were worth and the place fell silent. The auctioneer smiled and said sold and thank you very much. Obviously the attachment she had felt for those banners was not shared by the rest of the congregation. What are the odds of us finding someone like that to buy the banners if she decided to sell them? Possible? Yes, however not likely. The same is true when selling your home. The more competitively priced your home is the more likely it is to sell. What would you rather see in 30-60 days? Sold or Price reduced?

Home Sales

As of July 15 2008 Meridian Idaho had over 1453 active residential listings available for sale. Of these 466 were new construction homes or less than a year old and 987 were resale homes. Since March thru June we have sold on average a little more than 135 units per month in Meridian. This means we have about an 11 month supply of homes available. In some areas of the country they can count supply in the number of years; we have less than a year. Also a bit more than 135 units per month are selling. It could be worse. Does this mean that the market has changed? No. It is still a buyers market and the consumer can be more selective about how they want to spend their money. Will it stay this way? No, it will change. When? If I had a working crystal ball I would use it for a single lottery ticket; repeatedly. Is the market near the bottom?  Love the question. I believe it is near the bottom. Homes are selling and the trends seem to show that more are selling than what was selling in recent months. The Government is trying to keep the ball rolling by supporting Fannie Mae and Freddie Mac loan programs. Barron’s recently published a front page story that claimed we were at the bottom of the housing market. Time will tell. Lending institutions still need to get better at responding to short sale inquiries or they need to just move forward with the foreclosure process. Once the existing inventory of excess homes has been cleaned up; than the economy has better chance of moving forward.

Should I Sell Part 2?

The next thing to do is see what your home is worth. This can be a mind altering experience. Everyone wants their home to be worth a million and believe me when I say that as a realtor I want to sell it for a million however the truth is your once $200,000 home may only be worth $170,000. Ugh!… Sorry…. I know you didn’t want to hear that. However know you have a real number to work with when you visit the lender. Whoa! Hold on! I am not visiting a lender until I sell my home. Wait a minute! Who said sell your home? Remember we are trying to see if we should sell your home. Now that you know about what your home will sell for it is time to see if you can afford to buy your new home or not. It is nice to believe that anyone who wants a loan can still get one however with all that is going on now more than ever you need a really good lender who can still get you a loan. Many of us have surprises that show up on our credit reports that we have forgotten about because it is only a couple years ago that whatever has happened to mar our credit. In this market it may mean no loan. Several buyers have gotten to the closing table only to learn there is no loan. Now that is not happening as often however many of us find getting a loan is harder and we may need to clean up a few things prior to getting a loan. This is why you speak with a good lender. Once you know how much you can sell for and that you can get a loan the next step is to determine if you can find the home you want for the price you are willing to pay. If the answer is yes it is now time to sell your home.

Should I Sell my Home?

What a Great Question! Should you sell your home? The answer may surprise you. And the answer is, the same as it has been for as long as I can remember. It is nothing magical or secret.  The answer is … maybe. That is the same answer that I been giving to homeowners and investors for years. The first question to ask before you choose to sell or not sell is, why do I want to sell? If you need to sell, job relocation, divorce etc then you have already answered the second question, should I sell. If you would like to upgrade your home, more room, nicer, larger lot, better location etc then the answer to the second question is perhaps yes. Yes you should sell your home.   WHAT! SELL IN THIS MARKET!!! What are you thinking? Here’s the thing, if you sell your home for a perceived loss and still make a profit then yes now may be the time to sell and move up. A perceived loss? no way it is a real loss. My home was worth $200,000 and now it is only worth $175,000. I’m losing money. Yes you will have a perceived loss of $25,000 however if you still come out ahead then you can possibly move up to your next home and make money. If your next home was going to cost $350,000 you may now be able to purchase it for about $250,000 to $275,000. A savings to you of around $75,000 dollars. If you take away the perceived loss of $25,000 then you are ahead by about $50,000!!! And you can do this on any size home when you are moving up. WOW! How about that. Want more? Okay. You still haven’t answered the second question should I sell my home? Huh? How come? The numbers look good. Of course they look good however now that you want to sell you need to see if you should. More next Week.

Hud Homes

HUD homes start as an auction property that has a bid date. You must use a realtor to purchase a HUD home. Preference is given to buyers making the purchase of their primary residence, then to investors. On the bid date all bids are reviewed. Homeowners first, if no acceptable bid is received then it is on to investors. If no acceptable bid is received then it becomes an open daily bid until an acceptable bid is reached. A HUD home is a property that has gone through the foreclosure process that had a HUD mortgage insurance policy on it. No one bought it at auction and it was returned by the lender to HUD. To review some common questions by HUD home buyers visit Http://www.hud.gov/buying/comq.cfm  These homes come in all areas, shapes and sizes. In the late 80’s they used to publish a weekly ad advertising which homes are available as HUD homes. One of my homes was a HUD home. As always certain rules apply and you need to examine the home thoroughly before buying one. As of June 9^th 2008 there were only 4 HUD homes available in the area. It changes. So get out there and start looking.

How Do I Buy a Forclosure?

What a great question. To buy a true foreclosure at auction you need cash. That’s the short of it. There are some portfolio lenders out there that you may be able to use their money to buy at the auction however for the most part you will need cash or a cashiers check. Since most of us don’t have these types of funds readily available how else can you buy a foreclosure? You can buy a short sale. A short sale is the purchasing of a home that is in pre-foreclosure. The lien holders, all of them must, agree; to accept less than what is owed on the property It can take time, patience and effort however you can get a very good deal. Again, find someone who has done this before and can explain some of the pitfalls along the way. Start with a realtor. Find an office that has done this before. Keep in mind that as the buyer you are not doing anyone a favor. If the owner could keep their home they would. The bank doesn’t want to own real estate however they will make a business decision as to what they may want to accept or not accept based on the type of loan and amount owed to them. There may be hoops to jump through. In order to buy a home for less than market value you may have to give a little. Another way to buy a foreclosure property is to find a bank owned property or a VA, HUD, or a HomeSteps home. Most of these homes have been through the foreclosure process and can be purchased at a savings to the consumer. To buy a HUD home you must use a realtor. The other homes are generally listed by realtors. To buy the other homes, not a HUD, you make an offer similar to buying any other home. There may be certain addendums that need to be signed. Be certain to read them and if there is any doubt consult an attorney. Not all addendums are “standard” know what you are signing before you sign!

Short Sales

A short sale occurs when a lender or lenders agree to accept less than what is owed on a loan to allow you to sell your home instead of a foreclosure. This includes the first loan, second loan home equity etc. You don’t have to have all of these loans to have a short sale occur. You may have just one or two. You may have more. The point is all the lien holders must agree to the short sale for it to occur. It has been done before and will be done again. Why? Because this can be a win-win for you and the lenders. If they have to foreclose they may wind up owning a home. Junior lien holders, the seconds, home equity loans etc may get nothing at a foreclosure sale. Lenders like to lend money. Not own properties. Just because the lender allows a short sale to occur does not mean that you don’t owe them money. You may owe them the rest of the money, the balance. The lender or lenders may agree to give you forgiveness on the debt (you don’t owe them the balance). If the property you sell is your primary residence Congress passed a bill that the President signed in December that allows you not to declare the forgiveness given by the lenders as a gain and not have to pay taxes on it. Remember that is on your primary residence. If it was an investment then you may owe the IRS taxes. Talk to your CPA or accountant. The process for a short sale can take some time and the lenders require lots of information. Finding someone who can help you through this is a good thing. Realtors are a great place to start. Find an office that does this and start getting ready. Remember, you are not the first person to go through this and you are not alone. In good times and in bad times these things occur for many of the same reasons. Loss of a job, a death in the family, a divorce can all contribute to reasons why you are headed to foreclosure. Finding someone who can help with good advice is a great way to start. Not every realtor likes to do a short sale. Remember find a office that does short sales.

What Do I do if My Home is in Foreclosure??? Help!

The first thing to do is take a deep breath and relax. You are not the first person to be in this position and it is most likely not something you wanted to do. The first thing you must do is speak with the lender. Not always pleasant however it does give you the power to examine your options. And you have options. You will undoubtedly be inundated with every imaginable offer. Repeatedly!!! They will show up at your door claiming to bring salvation in every way possible. I personally would avoid any offers where I had pay money up front to get out of debt. Unless of course; it was to a bankruptcy attorney. Notice I said attorney, not one of those we’ll help you do it for less programs. I would also avoid any offer to sign my home over to a third party. Unless they were actually buying it, the loans were being paid and the lenders notified. Just because the loans are being paid does not mean that the loans have been paid in full. Huh, what was that? I said just because the loans are being paid it does not mean that the loans have been paid in full. Less than the full amount owed can be paid and the sale of your home can still occur. Really? Yes! Tell us more! OK What was just described is commonly known as a short sale. More in the next post

Foreclosures

Foreclosures are everywhere. The news, the talk shows, a house in the neighborhood. Everywhere. Everywhere. Everywhere. They are the cause of all our problems. Or so you may think. The truth of the matter is that while the number of foreclosures may be up; less than 2% of homes are in foreclosure. (According to Realty Trac) The truth is that approximately 50% of homes that are actually being foreclosed on in the Valley never reach the auction block. (Per a local Title Company’s foreclosure department) So perhaps the sky is not falling. Hmmm? Are home prices down from their highs? Yes. Does this mean I’ve lost money on my home and it is now a bad investment? Perhaps. If you bought a property during the peak of the real estate boom or refinanced your home during that period yes the value has probably gone down and it will take some time to regain that value again. It will come back. It just takes time. If you bought your home prior to that and did not refinance then your home is safe. It is just worth a little less than it was a couple of years ago. It is probably still worth more than when you bought it!!!